Nasdaq deal with Dubai to buy OMX
Mideast bourse would own 20% of the U.S. stock market, which would control Sweden's.
NEW YORK - The Nasdaq Stock Market Inc. struck a complex deal yesterday to sell a 20 percent stake in itself to the state-owned Borse Dubai in return for control of Sweden's leading stock market.
But the plan met with some questions from U.S. politicians concerned it would raise security issues.
If carried out, the Nasdaq deal would let the exchange meet a long-held goal of planting a flag overseas as its larger rival, the New York Stock Exchange, did this year with the acquisition of Paris-based Euronext N.V.
Nasdaq's plan would allow it to sidestep a further bidding war with cash-rich Borse Dubai for Sweden's OMX AB. Nasdaq would own the Swedish exchange, while Dubai would gain a foothold in the Nasdaq market.
Nasdaq would pay Dubai $1.72 billion in cash. Borse Dubai would get a 19.99 percent stake in Nasdaq and two of 16 board seats in combined Nasdaq-OMX. Borse Dubai's voting rights would be limited to 5 percent, however, perhaps to help assuage concerns that a Middle Eastern government would for the first time own a sizable chunk of a U.S. exchange.
Nasdaq plans to use proceeds from the deal to pay down debt and repurchase stock.
But a potential complication arose hours later when a group from Qatar said it had become the largest stakeholder in the London Stock Exchange P.L.C. Qatar has shown interest in OMX and could perhaps try to spoil Borse Dubai's bid for the Swedish exchange.
The transactions are subject to approval by shareholders and regulators in Europe and the United States. Nasdaq and Borse Dubai said the agreements had unanimous support on both boards.
Political scrutiny could further complicate the desires of the acquisitive exchanges.
U.S. Sen. Charles E. Schumer (D., N.Y.), chairman of the Joint Economic Committee and a senior member of the Senate Banking Committee, expressed doubts about the deal, saying "at this early stage, this deal gives me pause." Schumer sent a letter to the Treasury Department seeking a review of the deal.